Morgan Stanley, the investment bank, said on Monday that investors were overly optimistic and overestimated the positive effect son for Qualcomm. Morgan Stanley downgraded Qualcomm to hold and said the semiconductor giant’s valuation was no longer cheaper than its peers and that investors had overestimated the outcome of trade talks.
Qualcomm’s shares are up 65 percent this year, well above the 23 percent gain in the Standard and Poor’s 500-stock index.
James Faucette, an analyst at Morgan Stanley, said that as the valuation gap between Qualcomm and its semiconductor peers narrowed, Damore downgraded its QCOM rating from an increase in holdings, as the market appeared to:
1) Overestimating the probability of a trade deal,
2) Downplayed the impact of the FTC ruling,
3) It is expected to accelerate the promotion of 5G.
As investors’ confidence in the company’s ability to maintain business practices and its dominant market position in mobile cellular networks has grown, Qualcomm’s price-to-earnings ratio has risen to match that of other semiconductor peers, Faucette said.
Faucette raised his target for Qualcomm to $90 from $89. He also raised Qualcomm’s first-quarter earnings per share forecast to 83 cents from 79 cents. (Chinese Investment Network)